Be Alert And Pay Your Property Tax On Time
If you want to have the benefit of including your property taxes in your current years income tax you should make sure to talk to your mortgage lender. In most cases your lender would probably set up an escrow account and in December you would get a check for you to pay the property tax. There may be instances when this check does not come in by the end of December in which case you cannot take it into your current years income tax and avail the benefits even though you might file your returns only a month or two later. The property tax has to be paid by the end of the year for it to be accounted for in the years tax.
When your property tax is paid by the end of December you could take it as a tax deduction. However failure to do this will mean that the property tax can then be entered as a deduction only in the next years accounts so this effectively means that you lose out on one years deduction. You may be able to get a deduction on the mortgage interest but not on the property tax and this could just add up and not help with reducing your tax liability.
Just in case your mortgage lender has not set up an escrow for you then you need to pay the property tax yourself and that means saving towards it. Now this is quite hard to do especially if moneys tight and right in the middle of the festive season. Some wait to get a refund from their previous years tax but this usually comes in the last week of January which means you could miss the payment date and you will then have to pay it in July.
Worse missing an installment means you miss out on the whole installment plan or else pay extra interest and penalty. This could just be steep if left to add up and causes even more of a strain on your budget and the worst case scenario will be that you might just lose your house and no-one wants that for sure.
This is probably why it would be a better idea to ensure that your lender has an escrow account for you so the property taxes can be paid on time without all these ensuing hassles. Even if you miss one payment do try and catch up and dont let it get out of control to a point when things start getting into the disaster zone. Theres one constant - remember that - property taxes cannot be wished away they just have to be paid year after year after year. So be prepared to pay them well in time if you can.